What you need to know about ICBC’s proposed “fair rate” auto insurance model

This week, the Insurance Corporation of British Columbia (ICBC) has proposed a move to a “fair rate” system that will overhaul the way basic auto insurance is covered in British Columbia. It is hoped the changes will be in effect by September 2019 and will help the company return to being financially viable.

ICBC says it aims to create a fairer basic insurance premium model by focusing higher costs on high risk drivers. Motorists convicted of an infraction, having missed payments, or those involved in collisions will pay more for coverage while drivers with no issues on their record will pay less.

In a press release, the public insurance provider said “We want to make Basic insurance premiums more fair by holding all drivers more accountable for their driving decisions and behaviour… That means drivers should pay the right premium for the risk they represent on our roads.”

Under the proposed changes, the insurer will categorize premiums under three defining factors: the vehicle, discounts and add-ons, and the driver. How the company assesses the driver is arguably the biggest change proposed, aiming to put more accountability on the individual.

ICBC will look into how much experience a driver has and how many crashes they have caused. The company says under the current model, motorists are only affected by these factors “in a limited way”. The new rules would mean drivers with less experience and/or a poor history will pay more.

This means at-fault crashes (where the policyholder caused the collision) will be placed on the driver and follow them. If a driver causes a crash in a vehicle that is not theirs (even if they are legal to use it), the record will follow the driver and not the vehicle.

Any driver legalized to operate the vehicle will be listed on the policy. The principal driver will hold 75% of the premium, while the remaining 25% will fall on the other driver with highest risk.

“We would look at a customer’s at-fault crashes over the past 10 years,” ICBC says. “To minimize impacts upon implementation, we would only look back to Mar. 1, 2017 of at-fault claims history. Claims older than Mar. 1, 2017 would not be used in the new premium calculation. Each year thereafter, we would extend the scan period by one year, until 2027 when the full 10-year scan period would be in place.”

ICBC wants to give motorists some leeway, so will implement a one-crash forgiveness model. This means a driver with one at-fault claim with 20 years driving experience will not see their premiums rise. This will be assessed on whether the driver has caused a collision within the last 10 years.